Regressive Tax and Elitism in the Arcade

I was playing Retrofit: Overload and realized that t$his and many other shoot-em-ups (“Shmups“) employ a regressive tax system to incentivize improved play.

Regressive taxes attempt to reduce the tax incidence of people with higher ability-to-pay, as they shift the incidence disproportionately to those with lower ability-to-pay. The opposite of a regressive tax is a progressive tax, where the marginal tax rate increases as the amount subject to taxation increases. In between is a flat or proportional tax, where the tax rate is fixed as the amount subject to taxation increases.

Here is a video of Retrofit’s gameplay. Watch closely at the 25 second mark. If you have 3 or more guns and can hold onto them, you advance fairly easily. If you drop down to anything less than three, the difficulty level skyrockets. The game tries to compensate by handing you more guns at a faster rate than normal, but it’s never fast enough. Players are rewarded by playing a near-perfect game, which means skilled players inevitably play an easier game than low-skilled players, much like a regressive tax.

Retrofit takes pride in being like classic arcade games, which were often regressive too. These games selected for high skilled players and left everyone else in the dust, which created a class system not unlike monarchies where the elite paid exceptionally low taxes. The arcade owners would adjust the difficulty on the machine to strike a balance between challenging the extremely-high skilled players and collecting from everyone else. Set the difficulty too high, and the machine loses money. Set it too low, and your arcade loses its elite clientele. The arcade market values both.

Part of the joy in visiting an arcade was watching elite players. This was good for business too.